Comcast Could Join in Spectrum Auction

Comcast said it will participate in the upcoming federal spectrum auctions, but officials cautioned it isn’t looking to spend a lot of money in the quest for additional wireless assets.

Comcast has been quietly amassing wireless assets over the past several months, activating a Mobile Virtual Network Operator agreement with Verizon in October and talking to other carriers about the possibility of a potential hybrid WiFi-cellular product. But on a conference call with analysts to discuss fourth quarter results, chairman and CEO Brian Roberts said the largest cable operator in the country is not making a major push into the wireless space.

“All we’re doing is taking a paddle in an auction to see if there is an opportunity for the company to be rewarded in that auction with something that we think has strategic value,” Roberts said. “In the past that has proven to be not only a money maker, but given us more strategic flexibility and we want to see if that is the case this time. Beyond that, I don’t think it’s not any more than that.”

The Federal Communications Commission is expected to launch the broadcast incentive auction in the spring or summer, but details have been scarce concerning how much spectrum will be available.

Bidders for wireless spectrum in the forward auction have until Feb. 9 to apply, which doesn't mean they have to participate but only that if they don't put in the paperwork by that deadline, they can’t not participate even if they wanted to.

That means that any company that wants to at least kick the tires on the auction will be turning in that paperwork by Feb. 9. How much spectrum broadcasters ultimately give up -- which won’t be determined until after the auction begins -- could determine how attractive the auction is to forward bidders.

Comcast Cable CEO Neil Smit said the company is making the filing to “retain the option to participate.”

Smit added that Comcast already has valuable assets in mobile, including 13.3 million WiFi hotspots throughout its footprint. Any purchased spectrum would have to add to that.

“We really like the company we have right now,” Roberts said, pointing to the doubling of NBC Universal cash flow just five years after acquiring a majority interest in the programmer.

“We bought it [NBCU] right but we've operate it even better,” Roberts said. “There is nothing we feel we have to do.”

Comcast reported strong Q4 results, building on past subscriber momentum and growing video customers by 89,000 subscribers in the period, joining Time Warner Cable, which added 54,000 basic video subscribers in the period. While Comcast finished the year in the red – it lost 36,000 video customers in 2014 compared to TWC’s gain of 32,000 – it significantly reduced its subscriber deficit, compared to the 146,000 lost in the previous year. In a note to clients, Evercore ISI media analysts Vijay Jayant and David Joyce said they expect positive subscriber gains this year.

“Video results should dissipate some of the prevailing cord-cutting fears for Comcast and revalidates XI/X2 as a material differentiator in the market place,” the analysts wrote. “Comcast could grow the video base in 2016 given the current trajectory."